Facing disruptive startups, Conglomerates like Tata, Mahindra and L&T focus on tech now more than ever

As startups sprout by the hundreds and pull in millions in funding, the country's established businesses are looking for ways to protect themselves from being disruptedJochelle Mendonca&Megha Mandavia | ET Bureau | August 05, 2015, 10:13 IST

The Tata Group is not alone in paying far more attention than before to technology. India's industrial conglomerates, most of which are over 50 years, are looking to follow in the footsteps of the upstarts on the business horizon.

Mahindra Group, for instance, has appointed its first group level executive to take charge of digital innovation and ecommerce. L&T, a conglomerate known more for building roads than for being technological savvy, has hired McKinsey to help chart out a strategy to tap the Internet-of-things.

As startups sprout by the hundreds and pull in millions in funding, the country's established businesses are looking for ways to protect themselves from being disrupted.

“For each one of our businesses, it is critical to figure out the disruption that can be caused by commercial drones, aggregator apps, genetic compilers, digital assistants and immersive entertainment. It would be better to utilise these technologies to drive profitable growth,“ Gopichand Katragadda, chief technology officer at Tata Group, said in a group's quarterly publication, the Tata Review.

Katragadda said the group also has significant interactions with Israel's Tel Aviv University and Ohio State University . The Group Technology Office is helping Tata companies create technology roadmaps for themselves.

"This exercise has already begun and the Group Chief Technology Officer's team is assisting the companies. The Group Technology Office, by itself, is developing some platforms, which can be of benefit to several Tata companies. These platforms are on food security, energy security, consumer wearables and factory and fleet analytics," a Tata Group spokesperson said in response to queries from ET.

Conglomerates are also hiring chief digital officers to transform the customer end of the game to know, control and protect customers. ET reported earlier this week that the Mahindra Group appointed its first executive responsible for Digital Innovation and E-commerce, and Jaspreet Bindra, former Chief Executive Officer of Askme.com and angel investor, will head that initiative. Bindra is expected to help transform products, processes and marketing at the conglomerate.

“They (conglomerates) are also using digital to get into new areas and embed it in current business as well to keep up with the startup ecosystem. They don't want to miss the bus,“ Samiron Ghoshal, advisory partner and IT advisory leader at consultancy EY, said.

While Tata is running the process in-house through its group technology office, L&T has brought in outside help. The engineering conglomerate has hired consultancy firm McKinsey to help chart a technology plan.

“There is a group executive council that is looking at technology and we are working with McKinsey . The idea is to leverage all the expertise we have that is in different parts of the business and to see how it can be brought together to create innovation in areas like Internet of things,“ Keshab Panda, chief executive of L&T Technology Services, told ET in a recent interview. Panda added that he was part of the group's technology council.

But some people view the changes with scepticism, wondering whether large Indian conglomerates could truly take all the steps that would be needed to become more nimble.

“Few large Indian businesses have had to deal with mortality . In the West, it's part of their business folklore that large companies have been brought to their knees. Only the paranoid survive and true change comes only when you think you have a burning platform. It cannot come from buzzwords,“ Sharad Sharma, co-founder of startup industry body iSpirt and former Yahoo India research and development head, told ET.